MUMBAI: The National Company Law Tribunal has ordered the withdrawal of London-based Liberty House Group’s resolution plan for Amtek Auto subsidiary ARGL, calling its approach “casual”after it refused to pay a performance bank guarantee.
In a strongly worded order, the tribunal questioned the group’s bona fides, further highlighting its problems in establishing its credentials in India. Liberty House has earlier failed to pay a combined sum of Rs 4,810 crore for Amtek Auto and Adhunik Metaliks after being selected the winning bidder under India’s bankruptcy law.
ARGL will be the second Amtek Auto subsidiary, after Metalyst Forgings, to face hurdles in resolution implementation on account of the winning bidder’s reluctance to take ownership of the stressed asset. Deccan Value Investors, the successful bidder for Metalyst Forgings, has already filed an application to withdraw its plan for the stressed asset.
“The resolution process is a timebound process and those who participate in the resolution process must be serious customers and not the ones with a casual approach,” the principal bench of the NCLT observed in its order on ARGL on Wednesday. “Having succeeded in the resolution plan, the somersault taken by Liberty House put the whole resolution process and the machinery to quandary.”
Liberty House’s “unsavoury stance” would only attract adverse comments from any fair-minded person, especially when there is no justifiable reason to drag its feet, the bench said, slapping a fine of Rs 1 lakh on it for improper conduct to be paid to ARGL.
ARGL owes Rs 1,186 crore to lenders. Liberty House was required to submit Rs 60 crore as guarantee in State Bank of India’s account within 10 business days of getting the letter of intent issued to it on August 30 on being declared the highest bidder.
In October, the resolution professional petitioned the NCLT to approve Liberty House’s plan and direct it to pay the guarantee. However, the company said it would “not be in a position to honour the aforesaid commitment as stipulated by the committee of creditors.”
Liberty House refused to act even when the lenders showed willingness to relax the payment conditions. It was in this context that the bench said the bona fides of Liberty House become “doubtful.”
The $15-billion Liberty House, an international metals and industrial group led by UK-based Indian entrepreneur Sanjeev Gupta, earned the tag of being “acquisitive” after a string of purchases in Europe, Australia and the US.